Per capita state expenditures are related to the per capita number of prisoners in a state: Yi = a + Bprisonersi + ui
A: Given (X, Y) = (500, 4), (300, 4), (700, 5), (600, 7), graph the points
B: Calculate the slope and intercept.
C: Interpret these results.
D: Compute fitted values for each observation, and calculate the residuals.
E Sum the residuals. What should the sum be, and why?
F: Calculate the residual sum of squares, total sum of squares and explained sum of squares.
G: How much of the variation in state expenditures is explained by this model?
H: If you were to divide your X variable by 100 in order to make the scale between X and Y more similar, how would your results change?
Discuss the implications for slope (value and significance), intercept, and R squared.